For starters like you already found the 85-86 swingers are really bad for cracking. Cheapest fix, but also a good fix, 87-90 (250) rear end.
Next front shocks. The LT suspension is terrible especially the 85-86 as they are 1" shorter than the 87+. Jaytater aka voodoochassis makes a bolt or weld on kit to upgrade to the 87+ length shocks, but I wouldn't just go put 87+ stock LT fronts on it as you will probably barely notice a difference. You should try and find some aftermarket ones (remember 87+).
Doing the front suspension upgrades and putting a good rear end on will give ya a nice start for it.
I can honestly not tell from that view but is that the stock headpipe? If so I recommend getting a used FMF headpipe/silencer for it. Yes I am recommending a general pipe company only because no one else except DG really makes exhaust for the 85-86.
Also a seat cover and zip tying those rear fenders together should add around 10hp.